The U.S. District of Columbia is suing MicroStrategy (MSTR) founder Michael Saylor for failing to pay income taxes in the District. Saylor disputes the claim, saying he has lived in Miami. The case comes at a difficult time for Saylor's software company, which has nearly 130,000 Bitcoin on its balance sheet.

The attorney general is also suing MicroStrategy itself: the company allegedly helped him evade taxes - totaling 25 million - on his earnings in the District. According to the attorney general, it is the first lawsuit in a series to be filed against residents who misrepresent their residence. Whistleblowers are encouraged to report such "residents.

Saylor responded, "Florida is where I live, vote, and have reported for jury duty, and it is at the center of my personal and family life. I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts."

MicroStrategy in bad weather

MicroStrategy shares fell about 3% since the news came out. The Nasdaq-listed stock MSTR had already taken big hits over the last six months - although its share price is still almost double what it was before the Bitcoin purchases.

The news of the upcoming lawsuit comes not long after Michael Saylor stepped down as CEO. It is unclear if the two events are related.

The reason news surrounding Saylor and MSTR is being closely followed is that the company has place a big bet on Bitcoin. With a looming recession and an ex-CEO under fire, the question is whether the pressure is mounting on the company to sell (part of) its Bitcoin sooner or later.

MicroStrategy bears an interest burden of $43 million a year. That can be paid from profits: the annual figures for the last few years show a similar operating result. Also, MSTR still has a hefty dollar war chest. So while there is no acute problem, it is clear that MicroStrategy must continue to run well as a company in order to continue to pay off their interest and not have to sell their BTC.

Would that be a bad thing? Yes and no. If MSTR would have to sell, the subsequent price dip would give all of us a chance to buy Bitcoin nice and cheap. On the other hand, the failed experiment would discredit the idea of companies putting Bitcoin on their balance sheets. It was long hoped that more companies would follow MSTR. The companies that have done so are few and far between.